Speaker maker Polk getting into the headphone business

After nearly 40 years in the speaker business, Polk Audio is following music listeners from their living rooms and cars to their smart phones and their MP3 players.

The Baltimore company is moving outside its comfort zone — speakers for home stereo systems and cars — with a new line of headphones, out this month.

It is the first time Polk has sold anything other than a speaker or related accessory since a trio of Johns Hopkins University students started the company.

Until now, senior vice president Ben Newhall said, "we've grown by adding a lot of different categories within speakers.

"Speakers that sit on the floor. Speakers that sit outside on your deck or that are built into your ceiling. Speakers added to televisions is also a big growth area. There have been so many areas for us to grow in speakers that that has been our path for all these years."

But in a world where cell phones and other hand-held gadgets have allowed consumers to carry their music with them, Polk saw that it needed to enter new markets.

While the company doesn't see speakers ever going away, executives couldn't help but take note of the wild popularity of headphones — and not only as audio equipment, but as fashion accessories.

The popularity of Beats by Dr. Dre, Skull Candy and other brands have shown that consumers are willing to pay a premium for eye-catching, ear-pounding headphones.

"Before, the headphone was really a cheap accessory," said Sean Murphy, a senior analyst with the Consumer Electronics Association. "Now, the technology is much more advanced. The fact that people are willing to spend hundreds of dollars on headphones would have been inconceivable ten years ago."

The growth of headphone sales is outpacing that of home speakers. The industry sold 18 million units in the United States in the seven months ending in July, a 13 percent increase from the previous year, according to New York research firm the NPD Group. Total revenue from headphones during that period reached $549 million, a 34 percent increase.

Home speaker revenue during the 12 months that ended in August increased 8 percent over the previous year to $435 million. The number of units sold increased 9 percent to 2 million.

"I would expect headphones will eventually be a major part of our business," Newhall said.

But as the market for headphones grows, analysts say, it is also becoming more competitive — increasing the pressure for companies to distinguish themselves.

"The more interest we see, the more crowded the marketplace gets," said Ross Rubin, an analyst with NPD Group. "Clearly there can only be so many players."

Polk hopes to carve out a niche by selling headphones targeted at athletes and those who are into fitness. Market research conducted by the company found athletes want better sound quality in their headphones. They also want headphones that don't slip from their ears when they work out hard or sweat, Polk's research found.

Newhall said Polk has used some of the same technology in its headphones that it uses in its speakers.

"The actual physics of it are the same as the speaker," Newhall said. "We're turning the electrical speaker into an acoustic speaker."

Other companies have followed a similar strategy to success. Speaker maker Klipsch Audio Technologies has found a following for its headphones. "For many manufactures it can be an extension to an existing product line if they make other audio brands," Rubin said.

Murphy, from the Consumer Electronics Association, said Polk's track record should help it reach the new market.

"Polk has been around long enough and they have a good reputation," he said. "There are a lot of people who buy consumer electronics who have a lot of brand loyalty."

Polk has hired soccer star Heather Mitts and NBA player Rudy Gay to endorse the company's new line.

Howe Burch, executive vice president of TBC Inc., the advertising firm working with Polk on the headphone launch, said the athlete endorsements should help the company stand out from the dozens of others on the market.

"The other companies like Bose and Dr. Dre are using personalities from the entertainment and music world," Burch said. "We have professional athletes because we thought authentication was key for the kind of headphone w'ere bringing to market."

Mitts has also endorsed Under Armour products. Polk has not teamed with the Baltimore sports apparel company, but Newhall described a collaboration as something the company "wouldn't rule out and would consider."

Mitts described herself as a "headphone snob." She said music is what gets her through a tough workout, but that finding the right pair of headphones can be hard. She praised the fit and clear sound of Polk's headphones.

"My biggest issue occurs when I start sweating or picking up the pace and my ear phones go flying out of my ear," Mitts said. "The length of the cord is a common annoyance as well when you are running. I appreciate the short-cord option which Polk offers."